Economic growth was average in advanced and emerging countries as the year 2026 began; a fair state of affairs. In the United States, the economy was supported by spending by higher-income households and infrastructure construction, buoyed by artificial intelligence-related investments. The overall narrative was managed global inflation and easing monetary cycles.
The war in Iran, the defining event of the first quarter, upended this scenario in late February, adding a geopolitical dose of uncertainty to the outlook. Concerns about tariffs rapidly receded in the background.
So far, the main impacts of the war have been increases in the price of oil and other commodities, a rise in interest rates, and a strong American dollar due to its worldwide reserve currency status. This last effect being particularly damaging to the economies of emerging countries. Oil usage per dollar of GDP is at a record low but economic activity, and especially consumer spending, are nonetheless bound to soften and inflation to increase with a lag. Europe and Asia are net energy importers and face the prospects of higher economic input costs and weaker domestic spending as well.
The MSCI ACWI Index posted a -1.5% return this quarter. Sector performance varied widely.
The Energy (36%) sector surged, driven by a 77% spike in crude oil prices following the abrupt closure of the Strait of Hormuz. This supply shock also boosted the Materials (11%) sector, particularly fertilizers and agricultural chemicals (up 26%), which faced severe transit disruptions. Utilities companies also produce energy and the Utilities (11%) sector, a traditional safe haven, rose as well.
Conversely, Consumer Discretionary (-9%) was the worst performer, due to rising interest rates and fears of a consumer spending slowdown sparked by higher gasoline prices.
The Triasima All Country World Equity Fund delivered a 1.7% return this quarter.
Security selection was responsible for the entirety of the outperformance, driven predominantly from the Industrials and Information Technology sectors. Sector allocation detracted relative performance due to the 2% Energy sector underweight.
The following table presents the top and bottom contributors to relative return:
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*Securities not held or underweighted in the Fund.
Turnover focused on eliminating disappointing and poorly rated securities while introducing hard asset value and cyclical stocks to the portfolio. The Energy and Industrials sectors were thus added to while Communications Services was reduced. In Financials, banks were added to the detriment of capital markets or insurance companies. In the Information Technology sector, semiconductors were favored at the expense of software stocks.
On the quantitative side, the Fund has superior expectations, and higher revenue and earnings growth parameters than the comparative benchmark. However, its volatility and risk metrics are worse, and its holdings are more expensive.
The MSCI ACWI Index set new highs in January and February, but its upward trend evaporated in March. A sideways consolidation phase appears likely now. The Dividend Yield and Valuation style factors were strongest in the quarter.
The fundamental outlook for global equities has deteriorated due to Iran war’s repercussions. Fortunately, corporate profits keep on growing.
The posted rate of return is a historical total rate of return compounded annually, except for periods of less than one year, which are not annualized. The rate of return shown takes into account fluctuations in unitholder value and the reinvestment of distributions. The posted rate of return does not take into account investment management fees and income taxes payable by the unitholder, which would have the effect of reducing the return. The Funds are not guaranteed, their value fluctuates, and past performance is not indicative of future results.
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